New Zealand Energy Corp. (CVE:NZ)(OTCQX:NZERF) provided Friday an update on its eight well exploration program underway in the Taranaki Basin of New Zealand's North Island, designed to increase production and cash flow.
In mid-October, the company shifted its 3,000 barrels of oil equivalent per day production forecast to the first quarter of 2013, so as to coincide with the completion of its eight well drill campaign.
The junior oil and gas producer said Friday that its Waitapu-1 well remains shut-in pending further evaluation and potential sidetracking to a new location. The company's Waitapu site is just 1.3 kilometres south of Copper Moki, where it already has three producing wells.
The Waitapu-2 well, following initial production testing and a pressure build-up phase, is slated to start continuous production before year-end 2012.
The company also said its Arakamu-2 well has been completed across 18 metres, in two intervals, showing "good inflow and pressure build-up". But downhole mechanical issues have delayed testing, and the company said it will require the use of a service rig. It hopes to be able to use a wireline to determine the extent of hydrocarbons in the well, but will not complete well testing until late January.
The Arakamu site sits around 2.5 kilometres south of Waitapu. New Zealand Energy has spud the fourth well of its current eight-well program there, the Arakamu-1A well.
Arakamu-1A will target the Moki formation at approximately 2,700 metres, which the company may follow with a second Moki well based on the results from Arakamu-1A. It has the provision to drill up to seven wells on the site.
When drilling operations have been completed at Arakamu-1A and the possible contingent well, the drill rig will move to the site of the company's next well and a service rig will move on to Arakamu-2 to complete testing.
The junior New Zealand-focused company plans to begin construction of its fourth drill pad next week, with the Wairere site, which is located around 3.75 kilometres southwest of Copper Moki and 7.5 km southwest of the Waihapa Production Station. The company can drill up to six wells at Wairere, with the first well to target the Mt. Messenger formation at around 1,900 metres.
New Zealand Energy said it expects to finish the remainder of the eight well program by the end of the first quarter of next year, and will then move directly into its 2013 campaign.
Next year's program will focus on targets that are central to the Waihapa Production Station and associated gathering pipelines, expected to expedite tie-in of discoveries and reduce transport and processing costs.
The company also plans to drill two wells on the East Coast in 2013 to test both conventional opportunities in the shallower Miocene sands and unconventional opportunities in the Waipawa and Whangai oil shale formations.
Separately, the oil and gas company said it is on track to close the acquisition of assets from Origin Energy in the first quarter, including the Tawn Petroleum Licenses and Waihapa Production Station, as per an agreement signed back in May.
The station is located around 3km from New Zealand Energy's Copper Moki site, and is expected to reduce transportation and processing costs for its oil and gas production. As the only open-access midstream facility in the Taranaki Basin, the station ensures the company can process its own production, as well as offers opportunities for processing third-party gas, liquids, oil and water.
The company has also found 18 Mt. Messenger leads on the Tawn Licenses, many of which it said are accessible from existing drill pads.
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